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Should You Be Tempted to Sell American Airlines Stock?


Jun. 11 2020, Updated 11:08 a.m. ET

American Airlines (NASDAQ:AAL) stock fell in the pre-market trading session today. The stock fell 12.8% in today’s trading session at 8:10 AM ET. The stock fell after COVID-19 cases increased in some states where lockdowns have been easing.

According to a CNBC report, “Concerns about a second wave of coronavirus cases have risen as U.S. states push deeper into reopening. Texas has reported three consecutive days of record-breaking Covid-19 hospitalizations. Nine California counties are reporting a spike in new coronavirus cases or hospitalizations of confirmed cases.”

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Q1 performance

In the first quarter of 2020, which ended in March, American Airlines delivered revenue of $8.52 billion—a reduction of 19.5% YoY (year-over-year). Wall Street expected revenue of $8.94 billion. The company posted an adjusted EPS of -$2.65, which missed the consensus estimate of -$2.33.

Wall Street analysts expect American Airlines to report an adjusted EPS of -$7.79 on revenue of $1.26 billion in the second quarter. Analysts also expect the company’s revenue to fall by 54.8% YoY in 2020 to $20.7 billion. The sales could rise by 63.0% YoY to $33.7 billion in 2021. Meanwhile, the adjusted EPS will fall from $4.90 in 2019 to -$16.32 in 2020. Analysts expect a non-GAAP EPS of -$1.55 in 2021.

Analysts’ recommendations for American Airlines

Among the 18 analysts following American Airlines stock, three recommend a “buy,” six recommend a “hold,” and nine recommend a “sell.” Wall Street analysts’ mean target price on the stock is $12.75, which implies a 25.1% loss from the current level of $17.02. The consensus target price for the stock remained unchanged from last month.

Stock returns

American Airlines stock fell 8.2% on Wednesday and ended the day at $17.02. At this closing price, the company’s market cap is $7.2 billion. Notably, the stock is trading 51.4% below its 52-week high of $34.99 and 106.3% above its 52-week low of $8.25.

Based on the closing price on Wednesday, American Airlines stock was trading 38.3% above its 20-day moving average of $12.31. The stock is also trading 49.8% above its 50-day moving average of $11.36 and 2.3% above its 100-day moving average of $16.64. American Airlines’ 14-day relative strength index score is 64. The score indicates that the stock is approaching overbought levels.

At 8:35 AM ET today, Delta Air Lines (NYSE:DAL) and United Airlines (NYSE:UAL) stocks fell 15.7% and 15.91%, respectively. At the same time, the S&P 500 futures fell 2.45%, while the Dow futures fell 3.05%. Read CFOs Expect a Dow Jones Crash: Is Double-Dip Next? to learn more.


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